CEO Watch G.M. to Cut Jobs, Sell Assets
Battered by slumping sales and a sagging economy, General Motors C.E.O. Rick Wagoner announced plans Tuesday to eliminate its quarterly dividend, slash salaried jobs by 20 percent and further curtail truck production.
Wagoner warned of "significant" losses in the second quarter and offered the cost-cutting program as a way to finance G.M. through 2009.
"These were very difficult decisions but ones necessary to help us get through the current weak U.S. market and position us for long-term success," said Wagoner in a prepared statement. "We will continue to take the steps necessary to align our business structure with the lower vehicle sales volumes and shifts in sales mix."
Wagoner also said G.M. will cut cash bonuses for executives and health-care coverage for retired workers over 65.
The moves are expected to raise about $15 billion by the end of 2009, Wagoner added.
G.M. has lost $54 billion since 2005, eliminating 40,000 jobs during that time period. Additionally, sales were down 16 percent in the first half of 2008.
Just last month, at G.M.'s annual shareholders' meeting, Wagoner announced plans to close truck production plants in North America, as demand for its cars and trucks have dried up.
G.M. recently announced that it has put its gas-guzzling Hummer brand up for sale, and Wagoner is mulling the sale of other brands, including Buick and Saab.
With G.M. bleeding money, and no short fix in sight, it stock price has dropped recently to 54-year lows.
Merrill Lynch analysts recently predicted that G.M. could be forced to file for bankruptcy unless it finds more capital to withstand heavy losses.
